Adopting the Academies Chart of Accounts and automating your accounts return and financial statements
What is the Academies Chart of Accounts?
The academies chart of accounts (CoA) is an ESFA initiative which was first introduced in 2019. The purpose of the software is to align financial data across the sector and provide the opportunity to automatically populate the Academies Accounts Return, Budget Forecast Return and in the future, a set of draft financial statements.
Updates to the chart of accounts are made annually and released each spring for the financial period ahead.
The latest guidance for the financial period 2022/23 can be found by following the link here.
There are two ways that academies can adopt the CoA. The first being the native option which means the academy can adopt the chart of accounts within their own general ledger.
Alternatively, the academy can choose to adopt via mapping which means mapping the existing chart of accounts to the DfE’s chart of accounts via the academy’s FMS software suppliers. The adoption of the COA is not currently mandatory, however with many things introduced by the ESFA, it is likely that this may be the case in future years.
The ESFA comment that 54% of software suppliers were able to provide automated data for 20/21, this is forecast to increase to approximately 88% for 2021/22. As of January 2022, 26% of trusts had already adopted the CoA.
Within the guidance is a CoA structure and mappings document, this lists each of the DfE account codes along with all the information that relates to each of these codes including, the linear hierarchy, the account code description, and details of how each account code is mapped to the main tables within the Academies Accounts Return as well as the budget forecast returns. Even if the academy trust decides not to adopt the DfE’s chart of accounts at this stage, the document can still be a useful aid in populating the academies accounts return.
Benefits of using the Chart of Accounts
There are multiple benefits to adopting the CoA, some of which have been detailed below:
- Allows flexibility to tailor account codes to trust needs.
- Provides a standardisation across the sector which would also assist in the transition of schools between academy trusts.
- Assists in Improving in the quality of benchmarking data extracted from academies.
- Supports automation of the Academies Accounts Return (AAR).
- Potential for the CoA to support other returns such as the Budget Forecast Return (BFR).
- Future potential for the software to aid in the production of financial statements.
Important factors to note when considering the adoption of the Academies Chart of Accounts
The ESFA comment that the CoA has the capacity to populate around 80% AAR, this will include any sections which are populated from trial balance data. Sections such as the pension note, and staffing numbers will still need to be manually inputted into the form.
The AAR information is still required to be audited by your external auditor before completing the final submission
As mentioned above, in the future the CoA may also be able to aid in the production of financial statements. However, it is important to note that these do not currently have the capability of replacing the academies current statutory year end financial statements. The CoA produced financial statements will not detail the full disclosures as required by the Academies Accounts Direction / Academies Trust Handbook or the Statement of Recommended Practice.
Who can adopt the Academies Chart of Accounts
Academies looking to adopt the academies chart of accounts should firstly contact their software provider to understand whether the software is compatible with their current system.
We also recommend contacting your advisors and auditors to discuss the different options available and timing. At Kreston Reeves LLP we have a dedicated team who have experience in assisting academy trusts in advising on amongst many other things; adopting the CoA via both the native and the mapping approach, changing finance systems mid-year and year end and merging trusts changing the finance systems and adopting the COA.
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Carly James ACCA
- Audit and Assurance Assistant Manager
- +44 (0)330 124 1399
- Email Carly[email protected]
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